Community Forex Questions
What are the main types of savings bonds available to investors?
Savings bonds are a type of government-backed investment designed to be low-risk and reliable. The main types of savings bonds available to investors in the United States are Series EE and Series I bonds, each catering to different financial goals.
Series EE Bonds
Series EE bonds are fixed-interest bonds issued by the U.S. Treasury. They are sold at face value and accrue interest monthly, which compounds semiannually. These bonds are designed for long-term growth and are guaranteed to double in value if held for 20 years. Interest rates are set at issuance and remain constant for the life of the bond, making them predictable. They are often used for conservative savings or education funding.
Series I Bonds
Series I bonds are inflation-protected bonds. They earn interest through a combination of a fixed rate and a variable rate linked to inflation (based on the Consumer Price Index). The inflation-adjusted component updates every six months, making these bonds a strong hedge against rising prices. They are popular for preserving purchasing power over time.
Both types offer tax advantages, as federal income tax on interest can be deferred until redemption or maturity. They are also exempt from state and local taxes. These bonds are accessible through TreasuryDirect and make excellent additions to conservative portfolios.
Series EE Bonds
Series EE bonds are fixed-interest bonds issued by the U.S. Treasury. They are sold at face value and accrue interest monthly, which compounds semiannually. These bonds are designed for long-term growth and are guaranteed to double in value if held for 20 years. Interest rates are set at issuance and remain constant for the life of the bond, making them predictable. They are often used for conservative savings or education funding.
Series I Bonds
Series I bonds are inflation-protected bonds. They earn interest through a combination of a fixed rate and a variable rate linked to inflation (based on the Consumer Price Index). The inflation-adjusted component updates every six months, making these bonds a strong hedge against rising prices. They are popular for preserving purchasing power over time.
Both types offer tax advantages, as federal income tax on interest can be deferred until redemption or maturity. They are also exempt from state and local taxes. These bonds are accessible through TreasuryDirect and make excellent additions to conservative portfolios.
Nov 27, 2024 02:59